What is a Payment Gateway? - Definition & Meaning
A payment gateway is technology that processes online payments between buyer and seller. Learn how payment gateways work and which options exist.
Definition
A payment gateway is a technology service that processes online payments by securely transporting transaction information between the buyer, the seller, and the bank. It functions as the digital equivalent of a payment terminal in a physical store.
Technical Explanation
Payment gateways process transactions through a multi-step process: authorization (checking with the issuing bank), authentication (3D Secure / SCA), clearing, and settlement. They support various payment methods: credit cards, iDEAL, SEPA direct debit, PayPal, and wallets. PCI DSS compliance is mandatory for processing card data. Tokenization replaces sensitive card data with tokens to minimize security risks. APIs (Stripe API, Mollie API) enable developers to process payments programmatically. Webhooks notify the application about status changes like successful payments, chargebacks, and refunds.
How Refront Uses This
Refront integrates with payment gateways like Stripe and Mollie to enable clients to pay invoices directly online. When an invoice is sent through the client portal, the client can pay with one click via iDEAL, credit card, or SEPA direct debit. The payment status is updated in real-time in the invoicing overview.
Examples
- •A client receives an invoice through the Refront portal and pays directly via iDEAL, with the status automatically updated.
- •Stripe processes the monthly subscription payment and sends a webhook to Refront to update the invoice status.
- •On a chargeback, Refront automatically receives a notification so the finance team can take action.
Related Terms
Frequently Asked Questions
What does a payment gateway cost?
Costs typically consist of a fixed amount per transaction (e.g., €0.25) plus a percentage of the transaction amount (e.g., 1.5-2.9%). Exact costs depend on the provider, transaction volume, and payment method.
Which payment gateway is best for European businesses?
Mollie is popular for its excellent iDEAL support and simple integration. Stripe offers more advanced features for international payments and subscriptions. The choice depends on your target market and technical needs.
Is it safe to process payments through a payment gateway?
Yes, reputable payment gateways are PCI DSS certified and use encryption and tokenization to protect payment data. The merchant never directly handles sensitive card information.
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